Enphase Energy — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue was $293.3 million, compared to $291.9 million in Q2 2026 and $410.4 million in Q3 2025.
• GAAP gross margin was 43.3% in Q3 2026, down from 60.0% in Q2 2026 and 47.8% in Q3 2025; non-GAAP gross margin was 45.0%, down from 46.8% in Q2 2026 and 49.2% in Q3 2025.
• GAAP operating income was $6.5 million in Q3 2026, compared to $51.5 million in Q2 2026 and $66.2 million in Q3 2025; non-GAAP operating income was $53.6 million, down from $56.7 million in Q2 2026 and $123.4 million in Q3 2025.
• GAAP net income was $23.4 million in Q3 2026, compared to $36.1 million in Q2 2026 and $66.6 million in Q3 2025; non-GAAP net income was $54.0 million, down from $61.5 million in Q2 2026 and $117.3 million in Q3 2025.
• GAAP diluted EPS was $0.17 in Q3 2026, down from $0.27 in Q2 2026 and $0.50 in Q3 2025; non-GAAP diluted EPS was $0.41, down from $0.46 in Q2 2026 and $0.90 in Q3 2025.
• GAAP operating expenses were $120.7 million in Q3 2026, compared to $123.5 million in Q2 2026 and $130.1 million in Q3 2025; non-GAAP operating expenses were $78.4 million, down from $79.8 million in Q2 2026 and $78.5 million in Q3 2025.
• Cash, cash equivalents, and marketable securities totaled $931.8 million at the end of Q3 2026.
• Cash flow from operations was approximately $0.1 million in Q3 2026, compared to $40.3 million in Q2 2026.
• Capital expenditures were $11.5 million in Q3 2026, down from $14.4 million in Q2 2026.
• Deferred revenue (current) was $170.6 million and non-current was $355.1 million as of September 30, 2026, compared to $180.5 million and $337.9 million respectively as of December 31, 2025.
• Debt was $0 million current and $573.2 million non-current as of September 30, 2026, compared to $632.2 million current and $572.2 million non-current as of December 31, 2025.
• Reciprocal tariffs reduced non-GAAP gross margin by approximately 1.3 percentage points in Q3 2026, down from 2.0 percentage points in Q2 2026.
• GAAP and non-GAAP diluted EPS were reduced by $0.15 and $0.14 respectively due to impairment in investments.

Guidance and Future Outlook:

• Q4 2026 revenue is estimated to be between $225.0 million and $255.0 million, including shipments of 100 to 120 MWh of IQ Batteries.
• The Q4 2026 outlook includes approximately $51.2 million of safe harbor revenue and assumes sell-through will be down 10% compared to Q3 2026.
• Q4 2026 GAAP gross margin is projected to be between 38.0% and 41.0%, including approximately 2.0 percentage points of reciprocal tariff impact.
• Q4 2026 non-GAAP gross margin is projected to be between 40.0% and 43.0%, including approximately 2.0 percentage points of reciprocal tariff impact.
• Q4 2026 GAAP operating expenses are estimated to be between $119.0 million and $123.0 million.
• Q4 2026 non-GAAP operating expenses are estimated to be between $76.0 million and $80.0 million, excluding $43.0 million for stock-based compensation and acquisition-related amortization.
• Commercial shipments of IQ SST are expected to begin in 2028, with customer pilots planned for 2027.
• Future growth drivers heading into 2027 include the fifth-generation IQ Battery G5, the Propel prepaid lease program, IQ9 Commercial Microinverters, IQ Battery C80, EV chargers, and IQ SST.

Business Segments and Product Lines:

• Shipped approximately 1.42 million IQ Microinverters (655.2 MW DC) and 129.9 MWh of IQ Batteries in Q3 2026.
• IQ Battery shipments increased to 129.9 MWh in Q3 2026 from 113.8 MWh in Q2 2026.
• The number of certified IQ Battery installers worldwide increased to more than 26,000 in Q3 2026 from more than 25,000 in Q2 2026.
• IQ SST technology successfully demonstrated 13.8 kV AC to 800 VDC conversion using 132 power modules.
• IQ SST customer and partner pipeline more than doubled to over 50 during Q3 2026.
• IQ Battery C80, the first commercial battery storage system, opened for U.S. pre-orders in August 2026.
• IQ Gateway Fusion began production shipments in India in October 2026.
• IQ EV Charger 2 received ISO 15118-20 support approval for 2027 in compliance with EU AFIR regulations.
• IQ Meter Collar received approval for behind-the-meter installation by 80 utilities across the U.S. and Canada.
• IQ9 Commercial Microinverters are being utilized in commercial and industrial repowering projects across the U.S.
• Enphase Care, a premium support offering, had more than 7,500 homeowner enrollments in the U.S. as of September 2026.

Market and Competitive Landscape:

• U.S. revenue increased approximately 3% in Q3 2026, though growth was smaller than anticipated due to soft residential solar demand.
• European revenue decreased approximately 11% in Q3 2026 due to summer seasonality and continued weakness in certain solar markets.
• Global sell-through increased approximately 1% sequentially in Q3 2026, below the company's expectation of 10% growth.
• U.S. sell-through increased 5% sequentially but declined 35% year-over-year in Q3 2026.
• European sell-through declined 12% sequentially in Q3 2026, reflecting seasonality and softer demand, particularly in France.
• The core U.S. residential solar market faces headwinds from higher interest rates and the expiration of the Section 25D federal tax credit.
• Enphase is actively engaged with a leading hyperscaler and a global AI computing leader to shape IQ SST product architecture.

Risks and Challenges:

• Headwinds in the core U.S. residential solar market include higher interest rates and the expiration of the Section 25D federal tax credit.
• Revenue growth was below expectations due to soft residential solar demand and European market weakness.
• Global sell-through growth of 1% was significantly below the company's 10% expectation.
• Reciprocal tariffs continue to impact gross margins, reducing them by 1.3 percentage points in Q3 2026.
• Impairment in investments resulted in a reduction of $0.15 in GAAP diluted EPS and $0.14 in non-GAAP diluted EPS.
• Forward-looking statements involve risks including fluctuations in market demand, changes in installer and customer purchasing behavior, changes in tax credits, tariffs, and regulatory policies, energy pricing volatility, supply chain constraints, and technological development risks.

Management Commentary and Tone:

• President and CEO Badri Kothandaraman highlighted the successful demonstration of IQ SST technology and the development of solutions for AI data center needs.
• Management expressed confidence in the market opportunity for IQ SST, noting engagements with major technology leaders.
• Management acknowledged near-term challenges in the U.S. residential market but emphasized positioning for a new phase of growth driven by five key drivers.
• Management noted that Q3 revenue and earnings were impacted by the impairment in investments.
• Management stated that the company is addressing near-term challenges while leveraging power electronics expertise for sustainable long-term growth.

Other Key Points:

• Enphase Energy announced the deployment of the world's first 900 V GaN monolithic bidirectional switch devices in IQ SST power modules in partnership with Infineon Technologies.
• Power modules for IQ SST are being built in the United States to assemble and validate full-scale racks.
• Enphase announced expanded support for the IQ EV Charger 2 across several European markets.
• Enphase announced an expanded homeowner outreach effort in the Netherlands to prepare solar-only customers for the end of net metering on January 1, 2027.
• The Enphase AI Assistant became available in the Enphase App for homeowners.
• Italian homeowners can now build a complete home energy system combining solar, storage, backup, and EV charging on a single platform.
• Expanded support allows U.S. and Canadian homeowners with existing non-Enphase solar systems to add the IQ Battery 10C and whole-home backup.
• The company received tariff refunds and associated interest of approximately $52.0 million during the nine months ended September 30, 2026.
• Enphase Energy sold $235.0 million of AMPTC generated in 2025 at 93% of face value in the first quarter of 2026.
• The company settled Notes due 2026 in the nine months ended September 30, 2026, resulting in a cash outflow of $632.5 million.
• Repurchases of common stock totaled $129.957 million in the nine months ended September 30, 2026.